Shuaa Capital's value climbs

Shares gain 1.2 per cent after it extends a deadline either for converting bonds or agreeing a new conversion price.

Shares of Shuaa Capital gained 1.2 per cent on Sunday after extending a deadline either for converting bonds it issued to Dubai Banking Group or agreeing on a new conversion price. The bank said it agreed to extend the deadline until June 15 to reach an agreement on its Dh1.5 billion (US$408.4) convertible bond with Dubai Banking Group. Shuaa had earlier agreed a June 4 deadline and said it could buy back some or all of the convertible bond issued to Dubai Banking Group.

"The extension was made in the hope of bridging the remaining gap between their respective positions, and both parties continue to work toward a resolution which may be reached prior to the new deadline," Shuaa said in a statement on the Dubai stock market web site where its shares are traded. Talks between the two companies have stalled since November and Shuaa in May said both parties were no longer considering the option of extending the maturity of the bond by up to two years.

More recent negotiations have focused on finding a mutually agreeable resolution and Shuaa said "both parties recognise that a resolution cannot be deferred indefinitely". Shuaa shareholders were asked to consider the continuation or dissolution of the company last month. Under the law, shareholders have the option to dissolve a company if its annual losses amount to more than half its capital. Last year, Shuaa posted a Dh949m loss, compared with Dh550m in capital.

However, shareholders voted unanimously to give the board of directors blanket permission to renegotiate the terms of the bond, also allowing Shuaa to issue more shares to pay for the bond conversion should this become necessary. [e-mail]